Bradley v. Comm'r of Internal Revenue

1

T.C. Memo. 2024-7

SAUL BRADLEY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 24108-22L

United States Tax Court

January 22, 2024

Saul Bradley, pro se.

Brian S. Jones, David A. Indek, Amanda K. Krugler, and Holly L Dennehy, for respondent.

MEMORANDUM OPINION

GREAVES, JUDGE

In this collection due process (CDP) case, petitioner seeks review pursuant to section 6330(d) of the determination by the Internal Revenue Service (IRS or respondent) to uphold a notice of intent to levy for tax years 2013 and 2014 (years at issue).^[1]Respondent moved for summary judgment under Rule 121, contending that there are no disputed issues of material fact and that his determination to sustain the collection action was proper as a matter of law. For the reasons set forth below, we will grant respondent's motion.

Background

The following facts are based on the parties' pleadings and motion papers, the attached declarations and exhibits, and the administrative record. Petitioner resided in Pennsylvania when the petition was filed.

Petitioner jointly filed income tax returns for the years at issue with his now ex-wife. Respondent selected these returns for audit and determined $7,924 and $2,922 in deficiencies respectively.^[2] Respondent also determined accuracy-related penalties of $1,585 under section 6662(a) for tax year 2013. Respondent issued a notice of deficiency to petitioner and his ex-wife on November 13, 2015. Petitioner did not file a petition protesting the notice of deficiency within 90 days, and respondent assessed the deficiencies along with the penalty.

To collect these liabilities, respondent issued Notice CP90 Final Notice-Notice of Intent to Levy and Notice of Your Right to a Collection Due Process Hearing, on August 16, 2021. Petitioner timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing. Petitioner failed to check any boxes indicating the relief he sought. Petitioner attached a document to his Form 12153 asserting the following challenges: (1) the IRS did not properly send the notice of deficiency, (2) he was not responsible for the tax or penalties, and (3) he would face hardship if he paid the deficiencies.

The settlement officer reviewed petitioner's file and initially determined that he could not verify that the notice of deficiency was issued to petitioner because it was not listed on petitioner's account transcripts. The settlement officer requested a copy of the notice of deficiency and United States Postal Service (USPS) Form 3877, Firm Mailing Book for Accountable Mail (Form 3877 or certified mailing list), to verify that the notice of deficiency was sent. On February 15, 2022, the settlement officer issued Letter 4837, Appeals Received Your Request for a Collection Due Process Hearing, confirming receipt of the CDP hearing request and scheduling a telephone hearing for March 17, 2022.

On March 10, 2022, the settlement officer received a voicemail from petitioner, requesting that the CDP hearing be rescheduled because of deaths in his family. The settlement officer rescheduled the CDP hearing for April 5, 2022. Before the rescheduled hearing, the settlement officer received a copy of the notice of deficiency and Form 3877, which he used to verify that the notice of deficiency was properly sent. The settlement officer also determined that petitioner was not current on his filing obligations because he had not filed returns for tax years 2016 through 2020.

On April 5, 2022, petitioner called the settlement officer for the CDP hearing. At the CDP hearing, the settlement officer explained possible collection alternatives, and petitioner indicated he would be interested in currently not collectible (CNC) status. The settlement officer requested that petitioner submit financial information and his unfiled returns for tax years 2016 through 2020 by April 26, 2022.

On May 23, 2022, petitioner faxed a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to the settlement officer. On Form 433-A petitioner listed his current monthly income as $2,800. Petitioner listed the following monthly expenses: $400 in food, clothing, and miscellaneous expenses and $2,300 in housing and utility expenses. As a result, petitioner listed the net difference between his income and expenses as $100.

The settlement officer evaluated petitioner's Form 433-A and concluded that petitioner could afford payments of $518 per month.^[3] In performing that calculation, the settlement officer applied the IRS local and national standards to determine petitioner's allowable expenses: increasing the food, clothing, and miscellaneous expenses to $785 and reducing the housing and utilities expenses to $1,497. Thus, the settlement officer determined that petitioner was not eligible for CNC status. The settlement officer also determined that petitioner was not eligible for penalty abatement because he was not current on his tax obligations.

The settlement officer issued a letter to petitioner stating these conclusions. In this letter, the settlement officer granted petitioner an extension of time until August 12, 2022, to provide additional information as to why the settlement officer should deviate from the national and local standards and to show compliance with current return filing obligations. Petitioner did not respond to this request, and on September 27, 2022, the settlement officer issued the notice of determination, sustaining the proposed levy.

Petitioner timely filed a petition with this Court for review. Petitioner assigned error to the following issues: (1) he did not receive the notice of deficiency underlying the levy notice, (2) the settlement officer did not verify that evidence existed to show he owed the underlying tax liabilities, (3) the settlement officer failed to verify compliance with all applicable administrative rules and regulations, and (4) the settlement officer abused his discretion by rejecting his request for CNC status.

On July 11, 2023, respondent filed a Motion for Summary Judgment. On July 31, 2023, we ordered petitioner to file a response, if any, by August 28, 2023. No objection was received by the Court within that period. On September 6, 2023, we struck the case from the Court's September 11, 2023, Philadelphia, Pennsylvania, trial session. At this trial session, petitioner nevertheless appeared and was heard regarding his response to the Motion for Summary Judgment, which he alleged that he mailed to the Court. On September 13, 2023, we ordered petitioner to file a response to the Motion for Summary Judgment by September 15, 2023. Petitioner mailed a letter to the Court setting forth various frivolous arguments related to his underlying liabilities.^[4] On November 9, 2023, the Court received petitioner's original objection, dated August 18, 2023, which asserted the same arguments.^[5]

Discussion

I. Summary Judgment

The purpose of summary judgment is to expedite litigation and avoid costly, unnecessary, and time-consuming trials. See FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We may grant summary judgment where there is no genuine dispute of material fact and a decision may be rendered as a matter of law. See Rule 121(a)(2); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). Furthermore, we construe the facts and draw all inferences in the light most favorable to the nonmoving party to decide whether summary judgment is appropriate. See Bond v. Commissioner, 100 T.C. 32, 36 (1993). The nonmoving party may not rest upon the mere allegations or denials of his pleading but must set forth specific facts showing that there is a genuine dispute for trial. See Rule 121(d); Bond, 100 T.C. at 36. We conclude that no material facts are in dispute and that the case may be adjudicated summarily.

II. Standard of Review

Section 6330(b) permits a taxpayer to challenge an IRS proposed levy before the Independent Office of Appeals (Appeals Office), and section 6330(d) provides for Tax Court review of an Appeals Office determination. The Code does not prescribe the standard of review that this Court should apply in reviewing an IRS administrative determination in a CDP case; rather, we are guided by our precedents. Where the validity of a taxpayer's underlying liability is properly at issue, we review the IRS determination de novo. See Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). Where a taxpayer's underlying liability is not properly at issue, we review the IRS determination for abuse of discretion only. See id. at 182.

III. Underlying Liability Challenge

A taxpayer may dispute his underlying liability in a CDP hearing, but only if he did not receive a valid notice of deficiency or otherwise have a prior opportunity to contest his liability. See § 6330(c)(2)(B); Sego, 114 T.C. at 610. For purposes of determining whether a taxpayer may challenge the underlying liabilities, actual receipt of the notice of deficiency must be determined. See Sego, 114 T.C. at 610. A notice of deficiency is presumed to have been received by a taxpayer if it was properly mailed to his last known address. See § 6212(b)(1); Sego, 114 T.C. at 611; Campbell v. Commissioner, T.C. Memo. 2013-57, at *9 ("The Commissioner generally has prevailed in foreclosing challenges to the underlying liability under section 6330(c)(2)(B) where he establishes that a notice of deficiency was mailed to the taxpayer's last known address and no factors are present that rebut the presumption . . . of delivery.").

Respondent bears the burden of proving, by competent and persuasive evidence, the existence of the notice of deficiency and proper mailing of the notice of deficiency. See Coleman v. Commissioner, 94...